China Improving Is a Big Story

Is China improving? December exports increased 14.1 percent, highest level since last May and well above the 5 percent increase that was expected. November was up only 2.9 percent. Imports were up 6 percent.

This will help gross domestic product numbers — in the third quarter it was 7.4 percent. The fourth quarter could come in better than that, perhaps as high as 7.8 percent.

The Aussie dollar is up, the U.S. dollar is down, and big global material companies are trading up.

Elsewhere:

1) Earnings. It's still early, but a number of companies have had positive comments so far, including Costco Wholesale, Nike, Walgreen, and Monsanto. Alcoa was in line with expectations, but bullish on China.

The big issue: Are CEOs any more optimistic now that some parts of the "fiscal cliff" have been resolved? They are sitting on tons of cash — are they going to deploy any of that capital?

2) Still, a couple of holiday disappointments have retailers under pressure this morning:

a) Aeropostale said same-store sales for the nine-week period ending Dec. 29 were down 8 percent; earnings were revised downward to $0.20 to $0.24, from $0.36 to $041.

b) Tiffany said earnings would come in at the low end of guidance after reporting holiday same store sales declined 2 percent in the U.S. Europe was down 1 percent, while Asia-Pacific was up 10 percent.

Tiffany rallied earlier in the week when Signet announced holiday sales better than expected, but as several people have noted, this could also indicate that Tiffany was losing market share for people who spend $500 or less (Signet's typical buyer).